Deal To Watch: A More Efficient Way to Dine at Your Desk

2.7M

Key Stats: ToGoBOX on StartEngine

Valuation Cap

2.7M

Amount Raised

$48,565

Number of Investors

55

Minimum Raise

$10,000

Maximum Raise

$107,000

Likelihood of Max Unlikely
Start Date

11/27/2018

Stop Date

03/26/2019

Days Remaining

Closed

Security Type

Common Stock

Investment Minimum

$500

Deal Analytics

Click Here

Summary

ToGoBOX has been selected as a “Deal To Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10-20% of our deal diligence funnel.

The Problem

Did you know that nearly two thirds of professionals eat at their desks today. Time-starved, these convenience-seeking employees turn to food delivery over home cooking. We live in an age where convenience is valued nearly over everything else.

This is the major driver behind the expected food delivery market growth of 20%+ annually, generating $365Bn in sales worldwide by 2030 from it’s current $35Bn.

To meet the demands of this new subset of consumers, many companies have emerged to great success, with Uber Eats generating $6Bn in revenue in 2018 and Grubhub generating $683MM in 2017 despite facing fierce competition from other food delivery sites like Seamless and Doordash.

Investors, eager to capitalize on these rapidly growing consumer demands, have also been committing large sums to promising companies – over $3.5Bn were invested in food and grocery delivery companies in 2018 alone, with DoorDash alone raising about $800MM. In fact, just earlier this month, Postmates disclosed that it had filed for an IPO, with a valuation of over $1.85Bn.

Most existing food delivery companies, however, all operate under similar business models, placing less emphasis on target demographics, with more focus on broad functionality to as many users as possible. While this approach works well in general, there are certain segments of the population in which the current system is inefficient both in terms of cost and time.

The Solution

ToGoBOX is a startup food delivery company, specifically targeted at delivering lunches to busy professionals at work.

This increased efficiency cuts down on costs and mitigates uncertainties regarding delivery times, which has enabled ToGoBOX to charge just $1 in delivery fees per order, opposed to alternative food delivery services, which can charge up to $5 in delivery fees for each order.

While this model may not be the most effective way to handle individual orders, it is however particularly useful for their target market – companies with 100-500 employees, where ToGoBOX can deliver to a “pick-up point” for all employees at the company at their lunch hours.

ToGoBOX’s offerings are curated daily with the intent of offering a range of multicultural food offerings, with options for healthier alternatives to offer every employee selections that they can be satisfied with. Their menu list is carefully crafted to specifically indicate the contents of each menu item, with accompanying photos for additional clarity.

The following lists a number of competitors in the food delivery industry. While you can see the general food delivery market is rather saturated, the workplace lunch space is a unique pocket of the market with relatively immature competitors to date.

Company

Valuation

Business Model

Key Characteristics

Uber Eats

$20Bn

B2C

  • Individual orders

  • High delivery fee

Grubhub

$7.81Bn

B2C

  • Similar to Uber Eats

  • Pre-order features

Foodsby

$21MM

(Total Raised)

Workplace Lunch

  • Catering-like bulk orders

  • Restaurants time and location of delivery

ToGoBOX

$2.7MM

Workplace Lunch

  • Catering-like bulk orders

  • Ordering companies choose delivery times

Fooda

$34MM

(Total raised)

Workplace Lunch

  • Pop-up restaurant in lobby of large office place

Put simply, the value of ToGoBox is in its ability to provide a low cost way for companies to order in food for their employees versus more traditional delivery services.

While Foodsby is the most s imilar competitor, they are still in the very early days as well and have not gained any sort of meaningful market share.

In general, this is a hot market from a capital formation perspective. The question is whether or not ToGoBox and Foodsby provide a strong enough value proposition to be heavily adopted by workplaces, and if so will larger entities like UberEeats look to rapidly pursue this space as well?

Why ToGoBOX

1. Market Potential: In 2016, there were 433 million fewer restaurant visits compared to the previous year, a sharp contrast to the explosive 20% average annual growth rate that the food delivery industry currently enjoys. More significantly, ToGoBOX’s target market is sizable, and thus far, untapped.

While 62% of professionals report typically eating lunch at their desks, the fact remains that there are a number of professionals who continue to bring pre-prepared food from home or eat outside of the office to save on delivery fees.

ToGoBOX’s added value in lower delivery fees and higher delivery consistency is not only likely to attract professionals who currently order from alternative food delivery services, but also convince professionals who are hesitant to order food, to order food online.

2. Initial Product/Market Fit: Since their launch in April of 2018, the company has managed 330 active monthly users, growing every month by 30%, with an overall 16% growth in total orders/month. Among users, the company enjoys an 80% repurchase rate. Expect this number to lower as the company scales, but it is a positive early indicator that the product creates a positive overall user experience.

With the delivery model aggregating many orders into one delivery the team is also creating efficiencies, which should help the company’s bottom line. Management feels the same with expectations of a high operating margin, since a large user-base concentration in one location helps with higher utilization of their equipment, and therefore better cost allocation as well.

The Founders

Tae Lee (President/CEO), was a graduate of Rhode Island School of Design with a BFA in Architecture. Having served as a Supply Sergeant in the military, Lee had extensive exposure to logistics management, an important experience considering that their company’s competitive advantage is almost entirely based on the idea of their logistical efficiency.

Glenn Jeon (VP/CCO), also graduated from the Rhode Island School of Design, but with a BFA in Graphic Design.  During his internships, he worked closely with designers, directors which helped him gain a while experience in regards to branding, website design, editorial design and many others.

A key drawback to the company is the lack of prior exposure to business. While their backgrounds in fine arts are sure to come in handy while controlling the quality of their mobile app, effective resource management at a startup is difficult to optimize without prior exposure to the business side of a company. ToGoBOX does have a number of consultants to help advise on business decisions, but at the end of the day, both Lee and Jeon are untested and still need to prove their ability to run a startup effectively.

The Rating

ToGoBox is a Deal To Watch. It is in a market ripe for capital raising, user growth and company acquisition. The founders have identified a number of insufficiently met needs of a rapidly growing market segment, including improving delivery time consistency, and lowering delivery costs.

However, significantly more scale is needed, which will only be accomplished through intense capital raising. While pursuing secondary markets and office parks outside of major city hubs could help to reduce customer acquisition cost, it is still a relatively capital intensive business that will need large rounds of financing to become a legitimate competitor in this space. The low fee business model requires massive scale.

If you are looking to gain exposure to a market that has seen companies like Grubhub acquire Tapingo for $150MM, and Uber Eats acquire Ando, a niche delivery-only restaurant, for several million as well, this could be an intriguing investment option.

The level of traction is still extremely small with only hundreds of monthly users, but the team has been surprisingly capital efficient to date. If this is a sign of continued execution capability it may become an intriguing acquisition exit from the current $2.7MM valuation.

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About: Alan tsai

Alan has worked in finance positions at Costco Wholesale Corporation, where he assisted the team that launched Japan and Mexico's eCommerce platform and implemented search engine optimization programs. He has also spent time at KPMG, where he helped perform financial analyses for clients, and currently studies Finance and Operations & Information Management at Georgetown University's McDonough School of Business.

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